Archive for March, 2009

A report issued by Pricewaterhouse Coopers suggests that Northern Ireland will fare better than the rest of the UK during the recession.

The report forecasts a possible decline of 3% in 2009 whereas mainland UK can expect up to a 4% contraction.  Levels of unemployment in Northern Ireland also remain the lowest of any region in the UK.  This is despite the largest increase in unemployment since 1971 with the jobless total up 14,700 in the last year.

PwC Chief Economist Philip McDonagh predicts that Northern Ireland would “perform less worse rather than better than the rest of the UK, because of our structure – with a large public sector – we are going to suffer less than other regions.”

Although house prices in Northern Ireland have fallen in their worst slump since the 1980’s, the report suggests that the end may be in sight and Mr McDonagh states that there are “some reasons to be cheerful in the midst of all the gloom.  The lower Sterling/Euro exchange rate is good news for our tourist industry as we remain an affordable holiday destination.  The reduction in property prices means that houses are at a more realistic and affordable.

Whilst the report warns that the local economy is likely to shrink further we should take some comfort in knowing that things could be worse and are likely to be worse in other parts of the UK.

The Bank of England has announced a further interest rate cut to 0.5%.  This is the sixth consecutive cut in rates since October 2008.  It was hoped that this series of cuts in interest rates would stimulate lending, however any evidence of a positive impact is yet to materialise.

The Chancellor Alistair Darling has acknowledged that this latest cut will come as a further blow to savers but states that the key focus is getting the economy moving again.  He has also hinted that help will be announced for savers in the upcoming Budget.

The Bank has also announced that it would expand the amount of money in the banking system by £75bn.  This will be done by the purchase of assets and not purely the pumping of more money into the banks.  This move, known as quantitative easing has been deemed ‘necessary’ by Mervyn King the Governor of the Bank of England.  After carrying out a number of interviews yesterday to explain the measures taken, many economists are describing the situation as desperate, something both the Bank of England and the Government are keen to avoid.

Mr king said “Nothing in life is ever certain, but these measures we think will work in the long-term, I don’t know how long it will take, much depends on the situation in the rest of the world.  But if countries work together, these measures will I believe eventually work.”

This is an unprecedented move by the Bank of England and clearly uncharted territory but few are feeling any consolation from these latest initiatives as job losses continue to increase on a daily basis, families continue to live with the threat of loosing their homes and the economy in general continues to decline.  Experts are calling for the government to take more immediate and direct action, to ease the pressure on our businesses and our purses.